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Turning $5 into Thousands

I love to read about the little tricks people use to force themselves to save money. Apparently I’m not the only one. Yesterday Jeff sent me a brief story from The Boston Globe that describes how Marie Franklin saves every five dollar bill she receives. She’s been doing this for three years, and in that time she’s managed to save $12,000. She writes:

This idea will only work if you are disciplined. When I decided to save my fives, I meant it, and I save every one. No exceptions. (OK, once on the Mass. Pike I gave the toll collector a 20 and he returned three fives and four ones. I panicked. This was my allowance for the week. I asked him to give me a ten and more ones instead.) Otherwise, if I get a five dollar bill back — at CVS, or Starbucks, or Marty’s on Washington Street — I tuck it away, smiling.

When the fives pocket in my wallet reaches $50, I make a deposit in my credit union. When this account reaches $2,000, I buy a CD to earn higher interest. Also, it helps to pay with cash. You can’t get a five back if you’re always using credit cards.

Franklin writes that she’s always been a saver, and this was just another way to maintain the habit.

My wife, too, has always been a saver, and she uses a trick like this to accumulate extra money. For several years, Kris has been rounding every transaction up to the next dollar in her checkbook. If she spends $49.74 at the grocery store, she enters this in her checkbook as $50. If she spends $33.13 on gas, she enters it as $34. As a result, she saves an average of 50 cents every time she performs a transaction.

In 2-1/2 years, Kris saved an extra $500 using this method. That’s enough to treat herself to something nice. (Bank of America offers a similar program called Keep the Change.)

There are many variations on these sorts of saving tricks. It’s common for people save their pocket change in a jar, of course, but some save their dollar bills, too. Some find this sort of thing counterproductive, but others find that games like these offer motivation to save.

I really like the $5 bill idea. Only problem is… I use my check card almost everywhere. If I have cash in my pocket I tend to spend it more easily. Still it’s worth giving a try. I know the next time I get a $5 bill I’ll be thinking of this idea!

I certainly applaud Ms. Franklin on her ability to save, especially since she manages to save while at the same time being a Starbucks customer (I know some people consider the two polar opposites!). And she is correct in that it takes discipline, but if you are disciplined in saving, tricks aren’t necessary. I definitely do not agree with “rounding tricks” when it comes to cash accounts. I’m not condemning them, I personally believe that one of the main tenents of financial success is accuracy and being able to reconcile your accounts on a monthly basis, and urge my clients to get into that routine, which can get tricky if you round transactions in the register.

I also agree with Eric regarding the check card. It is a lot faster to many people, eliminates the trips to the bank for cash, simplifies expense tracking, and if you use a credit card even provides added purchase protection (not to mention rewards, etc.).

I once heard a radio talk show host describe his own dollar bill saving trick. He saved all $1 bills he encountered (the only exception being ones used for tips, etc.). His wife and daughter constantly made fun of him for it. When his daughter turned 16 he presented her with 1800 one-dollar bills in a little wooden box. She didn’t make fun of him anymore!

I have been saving all of my coins in a money tin which I cannot access. When it fills up then I go and cash it in (but sometimes I will spend some of the money first). I like the idea of the fives better. Because you make more money. After all you need 100 lots of 5c coins to make up and $5 note…but only one $5.
I think I will begin to employ this principle and start saving some more.
I am a struggling entrepreneur so I need all of the cash I can get.

Also I heard a story from one lady who came into my work who used to save up all of her $1 coins every year. She would save them in a big tin and then at the end of the year she would cash them in and use them for christmas. It would pay for all the Christmas presents and her children didn’t have to go without. Cool ay?

There are so many ways to save that you have to employ at least one of them

Seems to me the problem would be is that most of your change comes in $5 bills. It would mean you would either have to pay in ones or you’d have to buy things whose value is close to $10 or to $20; otherwise all your spending money would end up in savings and you wouldn’t have enough to buy necessities.

I like the idea of stashing the amount you save on recently kicked vices. Wouldn’t have to be just tobacco: could be alcohol, soda pop, or sugary Starbucks coffeeoids. Or all of the above…you’d soon be rich beyond your wildest dreams!

I added an extra amount to the withdrawals that eventually chain link to my Roth IRA contribution. The extra money goes into my ING account and adds into my savings twice a month. Making this automatic ensures I am saving without any effort!

At the risk of outing myself as even more bizarre than at first glance, I also do this five dollar thing. I have nowhere near 12 grand (mainly because like those above I mostly use my debit card), and I don’t save every one that crosses my path, but quite a lot of them. Why five bucks? I lived in New York during both Sept 11 and the blackout, and both days needed small bills for water, radios, and other assorted “appears on street corners at inflated prices” stuff. After that I wanted to always have 5 dollar bills on hand. They’re all sitting inside a copy of the Illustrated Life of Pi on my bedside table right now!

(I also save most of the 2 dollar coins I get, and cash them in annually. When my husband doesn’t raid them to buy cigarettes. Yes, they’re silly tricks, and the amounts are nowhere near my regular savings, but these are habits that have carried over for a while and I’m comfortable with them).

Just throwing change in a jar makes a big difference. I cashed in a year’s worth of change a few years ago and netted $180; I also cashed in another one elsewhere in the house for a total of $325.

It’s a pretty straightforward calculation. If you make a purchase a day, you will end up with some change. Suppose that change, between your various purchases, nets out to 50 cents per day. 365 days gets you $180! No effort involved.

My husband and I, married with no children, recently bought the children’s piggy bank called the Money Savvy Pig. Yes, really.

We are actually enjoying the four segments- save, spend, donate & invest. We get joy out of using a cash-based system now and putting all the extra coins into the bank. It’s amazing how quickly that money can build up. We deposit it into high-yield savings as soon as it gets full. We plan to make our annual charity contributions based on the money we’ve accumulated in our little piggy bank.

I don’t think of it as “tricking” myself into saving money, simply as another way to reward myself. It’s just gravy, if you get what I mean.

I generally try and pay only with notes. In Ireland, we have 1 and 2 euro coins so the smallest denomination I can pay with is a 5. This leads to about 200 – 250 euro (about 320 to 400 dollars) every four or five months.

I like the idea of saving as many of the low demonination notes as you get them – and getting a lovely surprise when all of it is added up.

But, if you’re keeping this as an easy-access cash stash at home while it builds up wouldn’t it just be a huge temptation to dip into it from time to time?

I like the idea of the Italian TerraMundi pots – there is only a hole in the top for putting money into, when full the pot is smashed to get at the cash (and buy another pot!).

The plain ones do not stand out as an obvious target for burglars or (a-hem) not-to-be-trusted visitors to your home. At just 6-7 inches in height they can easily be ‘transferred’ to pockets and bags etc.

Okay – I get the award for most bizarre. I cast a little silver spell now and then(yes, I’m a witch). One of the spell components is dimes. So I’m in the habit of tossing my dimes into a bowl to save for the spell. Used to be when the period of the spell was over I spent the dimes on something fun. Nowadays, I’m tossing them into another container – they are my RV savings. Yeah, so it’s like $2 a month – right now I’m concentrating on getting rid of debt and building an emergency fund. But meanwhile – I’m putting a bit back for my RV. Seeing that little bowl of dimes is also an affirmation that we are abundant enough to set aside money rather than needing every last dime to live on

Not to take the wind out of the sails on here, but this seems like both an arbitrary and inconsistent way to save.

Sure it sounds cool, save each type of bill, and watch the money grow, but I think a better way is to set aside a specific amount each month BEFORE you get spending cash, then you retain control, not the clerk handing back cash.

What if one month you don’t get any fives back. Or what if you get all fives, like the example in the op. Inconsistent and out of your control are not cool when it comes to saving.

I think you should maintain control over all aspects of your financial lives, including how, when, and where you save. Leaving even a portion of it to chance or luck is shortchanging (no pun) yourself.

I personally like the “Keep the Change” program that Bank of America offers me. Every time we use our debit card to buy a Starbucks coffee (or any other little purchase), we get money deposited into our savings. If the coffee costs $4.53, then Bank of America rounds up the purchase to $5.00 but puts $.47 into our savings. They even match a certain amount in the beginning.

It’s a no brainer forced savings. Great for people with little self-discipline… hey, I’m working on it… or for people who never carry around any cash.

Back when I wasn’t saving on my own, I worked for a company that reimbursed us for gas. It was deposited monthly without any notification. Instead of trying to track it down, I just ignored it and let it accrue. After 2 years I had over $2000 extra in my account (we did a lot of driving .

Now days I take all the silver change from my pocket and put it in a opaque jar on a book case. After a couple years, I take it to the bank and deposit it. I can get four to five hundred that way.

I really like this idea. I take advantage of the Wachovia “Way2Save” savings plan. Each time you swipe your card, $1 is transferred to your high interest (5%) savings account. You can also elect to have up to $100 per month transferred into this account from your checking account.

I’ve always been a saver. When I was a kid I saved my lunch money and allowance. When I got married, I started stashing the change from my husband’s pocket. Now, whenever I find I have cash in my purse…a 5 or 10 or 20…I stick it my a drawer. One year I paid for Christmas this way. Another year, we went on a cruise. I’m never tempted to get into it. Once it’s in the drawer, it doesn’t exist until ready for deposit!

Enh. Why do people decry this as inconsistent or a bad idea? Much like eating a balanced diet, little ‘money hacks’ like this are a fun part of a healthy financial life. Saving your spare change, rounding up, etc., should take the place of paying yourself first or stocking your emergency fund. If you can make saving money interesting or fun, then more power to you. If the author of this article managed to save $12k by being conscious of where her spare change was going, then fantastic!

Amanda, I checked out that Money Savvy Pig. It’s a great idea. However, it’s a shame you can’t designate which “fatter” part of the pig you’d like to save more for. I thought the donation part was too big for me and the save part too small. Cute idea though.

Next step up should be investing your money in a low-cost all-market index fund so you can actually grow your wealth over time. CD’s ultimately return you ZERO after taxes and inflation. Provided you don’t need the cash for anything in the next 10 years there is no other place for it that makes any sense than the equity markets.

I almost never use cash. My system works great for me: I’ve divided our monthly bills into “First Paycheck” and “Second Paycheck”. Every payday, I sit down and pay all the bills assigned to that paycheck, leave a small amount of spending money in the checking account, and transfer every remaining cent into our ING savings account. Then we simply cannot overspend because the money isn’t in the checking account, and we have peace of mind knowing that all the bills are covered. Since our 401k contributions come out before the paycheck, we end up paying ourselves first AND last!

I do something similar… When I was a waitress at a diner, one of my coworkers saves all the change for his college tuition. Makes enough in change that it covers a class or two and some books every semester. He only counts the note tips in his budget (and budgets for the entire tuition bill in case he’s short though he never actually has enough income for that).

I took that idea and the one about rounding up in your registry/saving change from cash spent and put them both together… nbut after a couple months of that I realized HEY! I’m screwing up my financing!

I wasn’t adding in my change from tips into my cash income. But the change from purchases made with the cash tips I WAS counting also went in the same change jar… and then got added to my income as tip money when it went to the bank (about $70/month). Problem was, all my purchase-change was getting double-counted as income. Maybe $10 a month or so. Not a lot but enough to screw up my income estimates (not to mention increasing the amount spent in each category that I spend cash in)!

I started using quicken a couple months ago and I figured out how to fix my problem (besides using separate jars, which I would still manage to screw up). When I enter the data from purchases into my cash registery in quicken, I also have a “change” account that is hidden and not in my toolbar. I can enter the full dollar amount as I have been, but use the split function to put the exact amount spent into the proper category and put the change into the other registry. That keeps my expenses neat and tidy, and when I go to put my jar in the bank, I can subtract the “change” from the full amount and I have my change-tips amount for the month. No double counting income.

Sounds a lot more complicated than it is (and no it doesn’t beat paying yourself first–I do that too).

When I was in college, I bartended 5 nights a week to pay for school and rent. At the end of each shift, I’d end up with a tip jar half full of change. The servers and other bartenders usually didn’t want to lug home an apronful of change after a long night, so they’d just toss their coins in my tip jar on their way out. I would deposit the cash and payroll checks to pay rent and bills, and I’d put the change in a large bin at home. Every Sunday, I’d wrap change while I watched “Sex and the City.” This became a weekly ritual. Over two years, I paid off over $6000 in credit card debt using the “change fund.” Even though I’m now paid through direct deposit, my husband and I still save all our change in a large jar. When the jar is full, we wrap the change and use it to make an extra payment on our car loan.

Like Eric, I don’t really see the point of this sort of thing. There is only one way to save, and that is to spend less than you earn. Whether the money is saved as five dollar bills or change or just money left in your account at the end of the month makes no difference, your savings is the net result of your income less expenses.

The only way this sort of thing works is if it causes you to reduce your spending (or, I guess, if you write about it and increase your income). Otherwise it’s just unnecessary overhead. If you save a five dollar bill, but don’t reduce your spending, that just means you have to take an extra five dollars out of the bank in order to put it back later. Similarly, spending change is only bad if you spend it on things you wouldn’t've bought anyway.

It’s great that she’s managed to save $12,000 over three years with this “trick”. However, I saved over $25,000 last year with a combination of automatic withdrawals and saving all windfalls and money that’s left over at the end of the month. Doing it via five dollar bills wouldn’t increase my savings, but it would require a lot more trips to the bank.

I enjoyed this post. A few years ago my uncle was able to make the downpayment for his kitchen renovation from cash he saved whenever he broke a $20 bill. His method was to save ones, fives and tens of the same serial letter till he reached a stack of 50.

I thought it was funny and teased him about being Type A until one day the lightbulb went on in my own head. I now save ones and use them for pampering, etc. I also save quarters for laundry and dimes for things like library fines. Nickels and pennies I donate to an organization.

I find this a fun way of adding to my savings. I used to be a heavy debit card user and now that I’m trying the envelope system, so I have more cash. I think I’ll take a look at saving fives.

I like Bank of America’s Keep the Change saving program. They round up the charge and deposit the difference in a savings account for me:$2-$20 a month. As a result I automatically round every purchase up when I record it which makes for simplified bookkeeping.
They match a percentage or have the past two years in addition to paltry savings rate and that’s a nice bonus.

I have to agree with Troy @22. Saving willy-nilly like this is nice and certainly better than not saving at all, but it’s a good indication that the person doesn’t have a savings goal. You’re likely to make much better progress if you have a clear goal in mind.

Step 1: Figure out what you want to save for.
Step 2: Figure out how much money you’ll need, and when you’ll need it.
Step 3: Set aside as much money every month as you need to reach your goal on time.

The fact that the author of the piece doesn’t have a clear goal is telling: “People always ask me what I am going to do with the money in my fives accounts. I have no idea. I’m having too much fun watching it grow to want to spend it.” Saving and investing should have a purpose.

I always used to save my nickels and dimes and roll them up so I could deposit them into my chequing account. However, since I started funneling budget surpluses toward my student loan debt, I now do the same with rolled-up change.

My last haul was five dollars in dimes, two dollars in nickels, and ten dollars in pennies. Mind you, a lot of those pennies were stashed by my mom, but they still helped.

Recently, my apartment building changed its laundry machines; they don’t accept coins anymore. I used to set loonies (one-dollar coins) and quarters aside for my loads; now that I don’t need them anymore, I stash my quarters so that I can roll them up and deposit them. I just need one more so that I can haul ten dollars to the bank.

I totally agree!!!! Some people think I’m strange and my boss disagrees that it is “extra” money saved but I have an extra $1400 in $5 notes that I didn’t have 8 months ago so I think that speaks for itself!

Nice idea, however it demands carry cash all the time, which is something I never do. I use my checkcard for virtually everything. However, I do save loose change whenever I find myself with change in my pockets. Not too long ago, I found myself short on funds 2 days before payday, and I was unwilling to dip into my emergency funds, so I pulled out the plastic gallon where all my loose change goes, and emptied it into the local change machine. I walked away with $250.

That’s what I learned when I was a kid. Saved up several thousand dollars from loads of odd jobs and by the time I was 16 I had enough to pay for my pilot’s license. We’re not talking the 1950′s either, late 90′s.

My budget already includes a regular chunk of money geared towards savings, but I have my own little trick that works pretty well for me. Each week, I withdraw a set dollar amount which covers my personal expenses. (i.e. lunches, sundries, etc.) Whatever is left over goes into a small coffee can. Some weeks it’s only a dollar or two, while other weeks it’s twenty or more. Right now, I use the can money as ‘fun money’, but I have used it in the past to save up for specific needs. It inspires me to be careful with my spending each week, as I enjoy the weeks I can put a bigger bill in the can.

After reading many of the comments, I think some people are missing the point of this kind of saving. I already have a 401(k), an IRA, an emergency fund, and another savings account that are funded monthly. These are things that should be taken care of like you take care of your rent or car payment. Saving your 5′s or coins is mostly for discretionary spending. It’s fun to see how much you can save by just stashing a little here and there. I would have just spent that money somewhere if I hadn’t stashed it, but now it has multiplied in my drawer and can be used to buy something I really want or I can use it to increase one of my savings accounts. Either way, I’m ahead.

I think it is important to note that change in a jar or excess monies in a checking account (as long as it isn’t a high balance reward checking account) are LOSING MONEY at the rate of inflation. I don’t agree that this is a saving technique. If you gave me a dollar and a year later I gave you back 96 cents, would you consider that a savings technique?

Call this what it is: it’s a way to curb spending. If you hide money from yourself, you can’t spend it. The person with the $5 bill idea says that her method takes incredible discipline. If she has incredible discipline, WHY DOES SHE NEED THE METHOD?

“In 2-1/2 years, Kris saved an extra $500 using this method. That’s enough to treat herself to something nice.”

All due respect, but why is she “treating herself to something nice”? That sounds like code for spending money she doesn’t need to spend. That sounds like the problem, not the solution to a problem.

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